I wanted the double dip!
As I said yesterday on Foxbusiness.com Live, a so-called “double dip” recession is still a very real possibility for the economy. What I didn’t get to say is that if that does occur, say by the second or third quarter, it wouldn’t surprise me if the NBER, the outfit that dates recessions, were to declare this entire span, beginning in December 2007, one long recession.
And this morning we got a report that industrial production rose in December, with capacity utilization edging up to 72%. That’s good, but (and there’s always a but) IP rose mainly on the back of increases from utilities ramping up because of the cold winter.
And capacity utilization remains well below its long-term average of 80% (and that’s just the average, forget about an economy that’s roaring,) and is still closer to its record low of 68.3% hit in June. There’s still an awful lot of slack in the economy, is what that all means. Which is a goofy, econospeak way of saying the nation’s factories could be producing more, but aren’t. The reason, of course, is a lack of demand from consumers.
Here’s something from another part of the DJ empire:
WASHINGTON -(Dow Jones)- The World Bank’s chief economist warned Thursday the global economy may suffer a double-dip recession.
“The foundation for the recovery is very fragile,” Justin Lin told the Council on Foreign Relations. “We may have a double dip,” he said, citing excess global capacity that could linger until 2014.
Beyond the weak economic fundamentals underlying the emergence from recession, Lin said he is also concerned that the world economy is entering “uncharted waters.” In an environment of low interest rates and excess capacity, most of the liquidity could go into speculative investments, he said.
Other risks are that banks continue to hold bad debts on their balance sheets, as well as an potential rise in protectionism, said Lin. While rising debts from fiscal stimulus is also a concern, it will only become an issue if the spending doesn’t boost productivity, he said.